Expert Interview: How will California’s solar market change in 2018?

What are your predictions for California’s solar and energy storage market this year?

In the near term, we’ll see a slow first quarter in California, based on our analysis of recent data. Uncertainty due to rate changes as well as the Section 201 trade case will slow things down and affect companies across the state.
However, there’s still every reason to be bullish about the California solar and storage market in the long term. In the big scheme of things, once uncertainty is eliminated, we can go back to building and growth. The high-level influences that drive growth in the California market won’t change. We will still have a state that is committed to reducing our reliance on fossil fuels and increasing our demand for renewable energy. This energy transition will become even more important as the electrification of the transportation section continues. These larger forces are not stopping or slowing down because of mini-blips in state and federal policy decisions.


Do you think the Section 201 Trade Case impact will be different in other states?

California has a far more robust solar and energy storage market than any other state, thanks to state-level policies. In many ways, we are more protected from these kinds of decisions on the federal level. It’s no secret that the trade case will hurt the utility-scale market more than distributed generation, simply because pricing is a stronger factor in utility procurement decisions, and states that are more dependent on utility-scale projects for their solar growth will likely see a slowdown in new projects.
For distributed generation, it is important to watch the impacts that rate changes and changes to NEM have on the market. California is making a shift to time-of-use rates that are based on the time of day energy is consumed as opposed to just the season. The solar industry will only embrace these rates if we can start to see energy storage become more cost effective. This way we can protect consumers from price spikes and also reduce electricity demand to ‘make the sun shine at night’ -- that’s the beauty of storage. These rates are smarter and more granular but it only work if storage is made available. What we’re trying to build is a decentralized interactive grid as opposed to a top-down 20th century grid. We’re trying to take a more thoughtful approach for customers exporting to the grid, and create a consumer-friendly market.  


How can market incentives foster growth for both solar and energy storage in California?

There are two ways California can encourage solar and energy storage. First, California can offer consumer rebates to spur demand. Second, the state can orchestrate favorable rate structures. A traditional rebate could be set for storage deployments, very similar to what California and other states did for PV. Rate structures can be designed to pay for battery services and storage devices in an ongoing way over time.
On the first front, the CPUC released an updated Self-Generation Incentive Program (SGIP) last year. We’re still in the beginning stages of this market, and storage installations are similar to PV market activity in 2007, but hopefully storage will grow much faster than solar. We currently don’t have any rate structures in use but we will see some experimentation with pilots in certain utility territories, particularly PG&E. Hopefully 2018 will see improvements on an incentive program and new rate structures to enable further investment in storage. State policymakers have a strong vision for a clean energy future: Do we put the pedal to the metal on energy storage or will we just workshop it without putting the market signals in place to allow the market to soar? That will be the big question.


What other key success factors will be important to the growth of the state’s solar market?

Unleashing the brains behind inverter technology is critical, because solar panels and the batteries are essentially dumb devices. We need the inverters, harnessing some of the world’s smartest engineers, to unleash the true power of an integrated solar and storage system.
Another dynamic at play is that California wants to engage in widespread fuel switching, state policymakers want to use natural gas for heating. Whether it’s a home heating system or a hot water heater, the state has not done much to reduce our natural gas usage in each sector. To get to zero carbon, you have to target the transportation sector (which is difficult) but also focus on the heat/water in buildings. Solidifying buildings as truly carbon-neutral is a major growth area for California and will require solar thermal, solar PV, and storage to move forward.


Where have you seen California policy influence markets in other states? What do you think is California’s role in shaping the solar market as a whole?

California always plays a leading role. We’re more ambitious with our renewable energy goals and can provide market know-how to the rest of the country. With significant deployments of solar, storage and decarbonized buildings, we’re putting our rules into practice and making it work in the real world. There are a lot of states that do interesting brainstorming and have some really great initiatives underway, but ultimately what really matters is megawatts on the ground – this determines whether there’s an actual thriving market that is driven by getting the rules of the game right. As part of the last of Gov. Jerry Brown’s administration, we’re hopeful that California will bring storage to the front burner of policy efforts.
Jobs are directly tied to sales in this sector. We saw a lot of companies lay off people in this last quarter and we hope that things stabilize and recover. That’s part of why it’s so important that we get market rules corrected.


What policy issues should we be talking about that haven’t been addressed enough?

Policy makers need to focus on fuel switching to reduce carbon footprints and natural gas usage. The Aliso Canyon disaster illustrates the fragility of California’s reliance on natural gas.
As we electrify everything, it’s important to strengthen the grid’s resiliency to blackouts and interruptions. The fires in California have further illustrated that importance. With increasing deployments of distributed solar and storage, we can use these renewable assets to provide electricity to emergency situations.


Intersolar North America supports a long-term partnership with the California Solar & Storage Association (CALSSA, formerly CALSEIA). In addition to providing input for Intersolar North America’s exhibition and conference program, the two partner organizations co-host the largest solar networking event in the state, Summerfest, of which all proceeds go directly to the California Solar & Storage Association to pursue advocacy efforts across the Golden State. CALSSA members also qualify for a reduced exhibit rate at Intersolar North America.